Chapter 8

Which of these payroll taxes are paid only by the employer

SUTA FUTA

Which of the following are included in the FICA taxes?

Social security tax and medicare tax

We record interest expense in the period in which we

incur it

What are the two classifications of liabilities?

long term and current

The current portion of long-term debt the amount that will be paid within the next __________ year.

next

Given a choice, most companies will prefer classifying liabilities as

noncurrent

Working capital

the difference between current assets and current liabilities

Payroll withholdings are

the items subtracted from an employee's gross pay to arrive at net pay

Liquidity

Having sufficient cash (or other assets convertible to cash in a relatively short time) to pay currently maturing debts

A company purchases inventory or supplies and promises to pay within 30 to 45 days. No formal agreement is signed. This transaction is recorded as a(n)

accounts payable

Common current liabilities include:

- Deferred Revenues - Sales Tax Payable - Current portion of long-term debt

When a company purchases items form a supplier that if does not immediately pay for with cash, the journal entry required includes a

Credit to accounts payable

Continengente

Uncertain situation that can result in a gain or a loss of a company

Which of the following must employers by law withhold from their employees' pay?

Unemployment taxes FICA amounts

Current ratio

current assets divided by current liabilities

Volker company signs a 3-months, $10,000 note. Stated interest rate is %12 payable at the maturity date. Interest incurred on the note is:

300

contingent liability

An existing uncertain situation that might result in a loss

T/F: current liabilities are always payable within one year

False

Which of the following are examples of fringe benefits provided by employers to their employees?

Reduced o no-cost company-provided services payment of insurance premiums on employees behalf contributions to retirement and other saving accounts

Which of the following are not required payroll withholdings?

State unemployment tax (SUTA) Federal unemployment tax (FUTA) Charitable contributions

Notes payable is classified as a liability that has which of the following effects?

creates interest expense on the income statement

The employer's portion of FICA Tax remitted to the taxing authorities is

The same as the employee

The financial statement where the deferred revenue account is found is the

balance sheet

FICA tax is paid by

both the employee and employer

Taxes collected for taxing authorities are recognized as

current liabilities

A liability present responsibility to sacrifice __________ in the future due to a transaction or other event that happened in the ________.

liability; past

Gladys Company signs an agreement under which Gladys may borrow up to $100,000 at a 6% annual interest rate whenever the company needs cash. This agreement is commonly referred to as a

line of credit

Contingent gain

an existing uncertain situation that might result in a gain

Which of the following obligations is NOT commonly classified as a current liability?

Note payable due in 3 years

Deductions from employee pay for contributions toward retirement saving plans and contributions for charitable organizations are examples of:

Voluntary employee deductions

A(n) ________ payable results from an agreement with a supplier to pay within 30 to 60 days, whereas a(n) _________ payable is a signed contract that promises to pay a specific amount with interest at a specific maturity date.

accounts; notes